Oil Price Too Low to Mine Joslyn Tar Sands

The Joslyn oil sands mine has been shelved indefinitely, a result of rising industry costs that made the $11-billion project financially untenable.

French energy powerhouse Total SA, along with its partners in the Joslyn north oil sands project, unanimously decided to put the project on hold because of rising cost pressures across the entire energy industry, said André Goffart, the head of Total’s Canadian division.

“Joslyn is facing the same challenge most of the industry world-wide [is], in the sense that costs are continuing to inflate when the oil price and specifically the netbacks for the oil sands are remaining stable at best – squeezing the margins,” he told reporters in a conference call.

… Part of the development was originally designed to use wells rather than trucks and shovels in order to extract bitumen. That idea was abandoned when an overpressurized well blew up, creating a crater.

“I thought they would have stopped the project then,” said Laura Lau, a senior vice-president and portfolio manager at Toronto’s Brompton Funds. “But no. More good money after bad. Good money after bad.”